Buyers and sellers are energised by the opportunity to unlock long-tail casualty risk through insurance-linked securities (ILS), with this momentum driving a broader transformation in the legacy reinsurance market, shifting it from one-off liability transfers toward long-term, strategic partnerships, according to Howden Re.As highlighted by the reinsurance broker, the legacy reinsurance landscape is currently undergoing a fundamental shift.“Once dominated by one-off transactions designed to offload past liabilities, the market is now moving towards more strategic, long-term partnerships that support both capital efficiency and future growth,” Howden Re explained.“Driven by mounting claims volatility, regulatory pressures, and the need for capital flexibility, cedants and reinsurers alike are reimagining how to structure deals that not only manage risk but also unlock new revenue models and market participation.” As per Howden Re, the legacy market is now shifting more towards long-term strategic partnerships, that deliver multi-year, sustainable capital relief and stability to cedants along with streams of recurring revenue to reinsurers.

These partnerships have taken the form of multi-year renewable reserve covers, pre-purchased forward exit options, and transactions which blend retroactive and prospective risk.“We will continue to see sidecar and collateralised casualty transactions that include a forward exit option, which is a pre-agreed legacy cover that paves the way for shorter-horizon players, like ILS funds, to participate in long-tail casualty risk,” Howden Re added.“Both buyers and sellers are energised around this concept, which is set to unlock casualty insurance risk to new players.” This trend holds considerable importance as forward exit options in sidecar and collateralized casualty transactions enable new capital, such as ILS funds, to engage in long-tail risks.

This development broadens the pool of available capital and enhances the manageability and sustainability of legacy casualty risk for both insurers and reinsurers.Seth Ruff, Managing Director, Head of Legacy Solutions and Structured Reinsurance, Howden Re, commented: “What was once transactional and reactive is now becoming a dynamic part of insurers’ long-term capital strategy.Structures like forward exits and blended covers don’t just transfer risk, they create durable alignment between cedants, reinsurers, and new pools of capital.

This shift is redefining legacy as a platform for future growth.” Ken Kruger, Managing Director, Legacy Solutions and Structured Reinsurance, Howden Re, said: “Creative solutions are opening the door for players who once viewed this space as inaccessible.The line between traditional underwriters and legacy reinsurers is blurring.” Moreover, while long-term structures gain traction, traditional approaches such as loss portfolio transfers (LPTs) and adverse development covers (ADCs) remain critical for addressing exited lines of business or complex claims requiring specialist handling and centralisation.For many property and casualty (P&C) insurers, loss reserves are the largest driver of required capital, making legacy reinsurance a key component of their capital management toolkit, the broker continued to explain.

“Clients rely on legacy reinsurance as a key part of their capital management toolkit, allowing them to reallocate capital away from past liabilities and towards profitable growth.” Howden Re also notes that P&C insurers continue to navigate the scale and unpredictability of claims inflation.Some players have elected to address this uncertainty by applying strengthening measures, while others are partnering with legacy specialists to mitigate potential exposures.Regardless of the approach, the overarching goal is to stabilise fluctuations in loss reserves and free capital for profitable growth.

“Traditional one-off deals will continue to close, of course, but an increasing number of deals will be built on creative, partnership-based models that shift traditional boundaries and introduce new participants,” added Ruff...All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.